Correlation Between Crombie Real and HR Real

Can any of the company-specific risk be diversified away by investing in both Crombie Real and HR Real at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Crombie Real and HR Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crombie Real Estate and HR Real Estate, you can compare the effects of market volatilities on Crombie Real and HR Real and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Crombie Real with a short position of HR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crombie Real and HR Real.

Diversification Opportunities for Crombie Real and HR Real

0.77

Correlation Coefficient

Crombie Real  HR Real

Poor diversification

The 3 months correlation between Crombie and HR-UN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and HR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Real Estate and Crombie Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Crombie Real Estate are associated (or correlated) with HR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Real Estate has no effect on the direction of Crombie Real i.e., Crombie Real and HR Real go up and down completely randomly.

Pair Corralation between Crombie Real and HR Real

Assuming the 90 days trading horizon Crombie Real is expected to generate 2.95 times less return on investment than HR Real. But when comparing it to its historical volatility, Crombie Real Estate is 1.35 times less risky than HR Real. It trades about 0.02 of its potential returns per unit of risk. HR Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  980.00  in HR Real Estate on December 1, 2024 and sell it today you would earn a total of  28.00  from holding HR Real Estate or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Crombie Real Estate  vs.  HR Real Estate

Crombie Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crombie Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crombie Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

HR Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HR Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crombie Real and HR Real

The main advantage of trading using opposite Crombie Real and HR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crombie Real position performs unexpectedly, HR Real can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HR Real will offset losses from the drop in HR Real's long position.

The idea behind Crombie Real Estate and HR Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.